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Behavioral dividend policy
[working paper]
Corporate Editor
Technische Universität Braunschweig, Department Wirtschaftswissenschaften, Institut für Finanzwirtschaft
Abstract "In this paper we develop an optimal dividend policy in the presence of limited rational inves-tors. Concretely, investors with mental accounts for dividends and stock prices as well as emotions like disappointment and elation embody the limited rationality. Furthermore, investors evaluate changes i... view more
"In this paper we develop an optimal dividend policy in the presence of limited rational inves-tors. Concretely, investors with mental accounts for dividends and stock prices as well as emotions like disappointment and elation embody the limited rationality. Furthermore, investors evaluate changes in wealth instead of final wealth. A management maximizing investors’ ‘modified’ utility results in the optimality of dividend payments as well as dividend smoothing, which both have long been puz-zles to financial theorists. Moreover, a model specification leads to a gradual dividend adjustment to changes in net earnings as described by Lintner (1956)." (author's abstract)... view less
Keywords
investment; distribution of profits; stock exchange; stock market
Classification
Financial Planning, Accountancy
Free Keywords
dividend policy; dividend smoothing; behavioral finance
Document language
English
Publication Year
2003
City
Braunschweig
Page/Pages
26 p.
Series
IF Working Paper Series, FW04V1
Handle
https://hdl.handle.net/10419/55235
Status
Published Version; reviewed
Licence
Deposit Licence - No Redistribution, No Modifications
Data providerThis metadata entry was indexed by the Special Subject Collection Social Sciences, USB Cologne